April proved to be a big month for M&A activity in the life sciences as companies announced more than $29 billion in agreed upon transactions during the month, the bulk of which occurred during the final week. The increased activity stood in stark contrast to the IPO market, which saw no completed life sciences offerings in U.S. markets during the month.

Nestlé's $11.6 billion agreement to acquire Pfizer's nutrition business was the largest transaction of the month. The Swiss food company fended off rivals Danone and Mead Johnson by pushing the price higher than analyst's estimates of $9 billion to $10 billion. The deal represents the largest acquisition ever for Nestlé, expanding its presence in emerging markets where 85 percent of Pfizer Nutrition's sales come from.

April also saw Watson Pharmaceutical's $5.6 billion agreement to buy the privately-held generics powerhouse Actavis Group. Actavis had about $2.5 billion in sales with more than 1,000 products in more than 40 countries. Other transactions in April include Hologic's $3.7 billion agreement to buy the diagnostics company Gen-Probe, AstraZeneca's $1.3 billion agreement to buy Ardea Biosciences, Takeda Pharmaceutical's $800 million agreement to acquire URL Pharma, and Amgen's $700 million deal to acquire Turkish company Mustafa Nevzat Pharmaceuticals, a maker of injectable generic drugs, as the biotech giant continues its push into emerging markets.

"The Amgen acquisition is seminally important for the biotech industry," says G. Steven Burrill, CEO of Burrill & Company, a diversified global financial services firm focused on the life sciences industry. "This not only reflects the strong move into emerging markets for the company, but an initial move into small molecule injectable generics, a first for the industry leader, and a follow-on to their earlier deal with Watson Pharmaceuticals, moving them into the biosimilars space too."

In April, agreed upon M&As of publicly traded companies commanded an average premium of 44 percent. However, typically, the purchase price of the companies averaged nearly 19 percent less than the 52-week high on the trading price of the shares of the targets, according to a Burrill & Company analysis. In the case of GlaxoSmithKline's $3.4 billion bid for Human Genome Sciences, though it represented an 81.3 percent premium to the closing price prior to the offer, it was 56.2 percent below the stock's 52-week high.

Though M&A activity took a sharp jump in April reaching $29.1 billion compared to just $6 billion in announced transactions in March, activity still lags the pace from a year ago. Overall, M&A activity through April lagged the pace of M&A activity through April a year ago as activity involving U.S. targets fell 25.1 percent and global activity fell 43.4 percent. That's attributable to outsized acquisition made during the first four months of 2011 including Sanofi's $20.1 billion purchase of Genzyme and Johnson & Johnson's $21.3 billion acquisition of Synthes.

"Despite the appetite acquirers have for products and access to new markets, there is still a gulf between buyers and sellers for some of the higher profile targets," says Burrill. "Nevertheless, M&A activity is picking up and this should continue as the pharmaceutical industry seeks to replace revenue from products losing patent protection. At the same time, in the absence of a vibrant IPO market, there are willing sellers to be had."

The IPO market in April remained unwelcoming to life sciences companies. Osprey Medical, an Eden Prairie, Minnesota-based medical device company, bypassed U.S. exchanges to go public on the Australian Stock Exchange. The company raised $20.8 million through the sale of Chess Depository Receipts. It's the third U.S. medical device company in the past year to look to the Australian market to go public in part because of a more welcoming regulatory environment for medical devices than in the United States. Life sciences companies that went public since January 2011 are down 10.9 percent as a group through April 30, 2012.

On the venture front, U.S. companies raised a total of $698 million in April with bioindustrial financings leading the way with $261 raised. Algae-based biofuels developer Sapphire Energy raised $144 million, the largest venture financing of the month. The therapeutics sector was a close second with $251 million. Argos Therapeutics, which withdrew an $86.3 million IPO in March because of an unwillingness to cut its share price as steeply as public market investors demanded, completed a series D venture financing for $25 million to begin late-stage clinical testing of its personalized immunotherapy to treat kidney cancer.

April also saw the signing of the Jumpstart our Business Startups Act, or JOBS Act, legislation intended to provide easier access to public markets for emerging growth companies. The law lowers the cost and regulatory burdens these companies face in raising capital and being public by providing exemptions to existing securities regulations.

On the partnering side, activity still is off the pace of 2011, but April did see a number of notable transactions including Merck's potential $1 billion deal with Endocyte for its late-stage ovarian cancer therapy. Other transactions reflected the high prices early-stage therapeutic candidates are commanding today. This includes Celgene's potential $250 million deal with Epizyme for its pre-clinical epigenetic experimental cancer therapy and GSK's $223.5 drug discovery collaboration with FivePrime Therapeutics focused on respiratory diseases.

About Burrill & Company
Founded in 1994, Burrill & Company is a diversified global financial services firm focused on the life sciences industry. With $1.5 billion in assets under management, the firm's businesses include venture capital/private equity, merchant banking, and media. By leveraging the scientific and business networks of its team, Burrill & Company has established unrivaled access and visibility in the life sciences industry. This unique combination of resources and capabilities enables the company to provide life sciences companies with capital, transactional support, management expertise, insight, market intelligence, and analysis through its investments, conferences, and publications. Headquartered in San Francisco, the company oversees a global network of offices throughout the United States, Latin America, Europe, and Asia. For more information visit: www.burrillandco.com.